City reports rising tide of property tax appeals

Homeowners are facing increases for the third year in a row

The number of appeals filed with the city contesting property valuations will likely surpass last year's figure of 6,000, a city official said.

Gary Kurokawa, administrator of the Real Property Assessment Division, said that his office had received 6,012 appeals as of yesterday, with an estimated 500 to 1,000 more appeals yet to be processed.

"We might be hitting the 7,000 range," Kurokawa said.

Kurokawa said the number is not a record, and he is not surprised by the figure.

PROPERTY TAX APPEALS RISING

With the number of appeals to property assessments headed toward 7,000 this year, here are the number of appeals filed over the past six fiscal years:2006: 6,0002005: 4,1792004: 3,8372003: 2,5902002: 2,4832001: 2,500

Source: City and County of Honolulu budget documents and officials

"This is the third year of consecutive increases (in assessments), and they are just appealing because of that, I think," Kurokawa said. "They're just going to appeal. They don't want to pay any more taxes."

Assessments that were mailed out by Dec. 15 showed a 15 percent increase in property values -- the fourth year for a double-digit rise -- and property owners had until last Tuesday to file an appeal. Property values are used to calculate the amount of taxes owed by a property owner.

Tax breaks passed last year -- including a lower tax rate and the doubling of the exemption for homeowners who occupy their home -- apparently were not enough to stem the tide of appeals.

"They don't equate that with the assessment. They just look that the assessment went up and say, 'OK, I going pay more taxes,'" Kurokawa said.

City Council members are continuing to come up with ways to give property owners, especially residential owners, a tax break.

"I think the valuation appeals is more a sign of people continuing to be a little surprised at the valuations that are coming out of the system," Council Budget Chairman Todd Apo said.

"I may be getting my valuation and say, 'Well, back in May someone was listing a property for that price, but there's no way anyone's getting that price today,'" he said. "That's the transitioning, cyclical issue of the system that creates an imperfection ... that causes people to appeal because there's that time lag."

Apo said he will be introducing a resolution calling on the city auditor to review the assessment process.

"It's making sure that the methodology and the valuations that are coming out are done reasonably and end up with reasonable results," Apo said. "If the whole issue is being caused by the market and not the methodology, then I think it's left to the mayor and the Council to how we deal with tax rates and actual taxes. But we may find that there needs to be fixes and tweaks in the valuation methodology."

Councilman Charles Djou, a frequent critic of the property tax system, said that the number of appeals is a cry from the people that that the property tax system needs further fixing.

"I thought last year we hit a high point with 6,000," Djou said. "Taxes are far too high. I don't think we'd have this problem if people thought their taxes were reasonable."